A report by Nina Olson, the Internal Revenue Service’s National Taxpayer Advocate, indicates that the system used by the IRS to collect back taxes is flawed.
She indicated in her annual report to Congress that the IRS makes it difficult for taxpayers to pay their late tax bills and is failing to promptly personally notify taxpayers of their delinquencies. The agency is also accused of not telling taxpayers about alternative payment mentods, such as installment agreements.
Sometimes taxpayers are not contacted by the IRS about their taxes owed until years later. By that time, the tax bill has increased significantly because of interest and penalties.
The IRS responded by saying that it has to have a balance between staff levels and the enforcement process. The agency also said that delinquent taxpayers do receive letters that notify them of taxes owed.
Between 2001 and 2004, the IRS labeled almost 934,000 delinquent taxpayers and “currently not collectible.” They owed a total of about $7.8 billion.